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I'm getting tired of all this "live debt free!" nonsense. There's good debt and bad debt, and people like this should learn the difference before giving financi

I'm getting tired of all this "live debt free!" nonsense. There's good debt and bad debt, and people like this should learn the difference before giving financial advice.

nilkn 12y ago
Debt is like sex. It's better to preach discipline, responsibility, and understanding than abstinence.
- jacquesm 12y ago
  I'm all for debt if used responsibly. Getting a mortgage can - depending on your personal financial situation and the market conditions - be a good decision. But paying it off versus buying a bunch of gadgets or a new car should be a no-brainer. Unless you have a guaranteed ROI on some investment plan.
  - NickPollard 12y ago
    It doesn't need to be guaranteed, it just needs to be better expected value, with a volatility you're willing to accept. Risk, like debt, is not always a bad thing, as long as you're informed and understanding of it. As Daniel Kahneman said in 'Thinking, Fast and Slow', people ought to take more opportunities with risky outcomes with positive expected values - some you will lose, but over your life, taking a large number of these risks will result in a positive outcome. (Obviously, only take risks where the negative outcome is one you can get through, i.e. it won't kill you, or leave you completely penniless etc.)
    - ryandrake 12y ago
      In any kind of gambling, including investing, variance is the killer. Unless you're making extremely small bets compared to your total bankroll, the inevitable down-swing will end you. The "take risky opportunities" advice is only valid if you can afford the worst possible outcome and still keep going.
jacquesm 12y ago
I personally am much more likely to follow anonymous investment advice. Do you have any tips on how I could re-mortgage my house or get some cheap loans to buy gadgets or invest? Hint: don't be a dick.
- DontBeADick 12y ago
  Actually, depending on where you live, now could be a great time to refinance your mortgage or take out a second one. Look into the concept of leverage sometime.
  - jacquesm 12y ago
    I think I've worked out the concept of leverage, but thank you for the attempt at eduction. On a similar note I could make similar comments about risk versus reward and the fact that very few greater-than-inflation strategies will come with any guarantees. Sure, you can use leveraging to buy 5 rental properties instead of only one or two cash. But that's not what the article talks about. It's not about how to allot your surplus millions, but about dealing responsibly with the income and the debt that most ordinary, middle class people have.
  - david927 12y ago
    If you honestly think that leverage hasn't become an overused tool in our society, you're simply not paying attention. On a side note, based on your tone, I'm guessing that your username is based on how people refer to you. Cool it.
charlieflowers 12y ago
OK, well look around. Do you know a lot of people (is it possibly even most of the people you know) who have 2 or more car loans, and at least one home loan? That's the "norm". That's what "everyone" does (everyone who is in a first world country and has a decent job). Is that somehow "smart debt"? Really? What's so smart about it? It is smart for whomever loaned that money out ... they get back free money paid consistently over the years. How is it smart, in 90% of the cases, for the borrowers? Our culture tends not to see this in the same way fish don't see water.
- JoeAltmaier 12y ago
  Really there's only car and house debt. The rest are small fry. And both of those can be problematic.
  - jacquesm 12y ago
    Don't forget about credit cards and buying on credit. That's not necessarily 'small fry' and neither are student loans.
    - chrisBob 12y ago
      The average US household has $15k in credit card debt. A mortgage can be a sound investment, but paying over 10% APR on credit card debt is almost always a bad decision. http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/ http://www.nerdwallet.com/blog/credit-card-data/average-cred...
      - seanflyon 12y ago
        It's still terrifying, but according to your link $15k is the average indebted household credit card debt. The average credit card debt is about half that because only half of households have any credit card debt.
- smackfu 12y ago
  >It is smart for whomever loaned that money out ... they get back free money paid consistently over the years. Now explain why the same logic doesn't apply to a landlord being the smart one, and a renter being the dumb one.
andy_adams 12y ago
My experience with average folks tells me that "live debt free" is really good advice. I'd wager that most people don't take any consideration of the cost of interest, and thus it'd be super beneficial to just eliminate debt. It's sorta a UI problem. The simpler, the better for the average person. "Live debt free" is painfully simple and it'd be a great start for most people.

I'm getting tired of all this "live debt free!" nonsense. There's good debt and bad debt, and people like this should learn the difference before giving financial advice.

nilkn 12y ago

Debt is like sex. It's better to preach discipline, responsibility, and understanding than abstinence.

jacquesm 12y ago
I'm all for debt if used responsibly. Getting a mortgage can - depending on your personal financial situation and the market conditions - be a good decision. But paying it off versus buying a bunch of gadgets or a new car should be a no-brainer. Unless you have a guaranteed ROI on some investment plan.
- NickPollard 12y ago
  It doesn't need to be guaranteed, it just needs to be better expected value, with a volatility you're willing to accept. Risk, like debt, is not always a bad thing, as long as you're informed and understanding of it. As Daniel Kahneman said in 'Thinking, Fast and Slow', people ought to take more opportunities with risky outcomes with positive expected values - some you will lose, but over your life, taking a large number of these risks will result in a positive outcome. (Obviously, only take risks where the negative outcome is one you can get through, i.e. it won't kill you, or leave you completely penniless etc.)
  - ryandrake 12y ago
    In any kind of gambling, including investing, variance is the killer. Unless you're making extremely small bets compared to your total bankroll, the inevitable down-swing will end you. The "take risky opportunities" advice is only valid if you can afford the worst possible outcome and still keep going.

jacquesm 12y ago

I personally am much more likely to follow anonymous investment advice. Do you have any tips on how I could re-mortgage my house or get some cheap loans to buy gadgets or invest? Hint: don't be a dick.

DontBeADick 12y ago
Actually, depending on where you live, now could be a great time to refinance your mortgage or take out a second one. Look into the concept of leverage sometime.
- jacquesm 12y ago
  I think I've worked out the concept of leverage, but thank you for the attempt at eduction. On a similar note I could make similar comments about risk versus reward and the fact that very few greater-than-inflation strategies will come with any guarantees. Sure, you can use leveraging to buy 5 rental properties instead of only one or two cash. But that's not what the article talks about. It's not about how to allot your surplus millions, but about dealing responsibly with the income and the debt that most ordinary, middle class people have.
- david927 12y ago
  If you honestly think that leverage hasn't become an overused tool in our society, you're simply not paying attention. On a side note, based on your tone, I'm guessing that your username is based on how people refer to you. Cool it.

charlieflowers 12y ago

OK, well look around. Do you know a lot of people (is it possibly even most of the people you know) who have 2 or more car loans, and at least one home loan? That's the "norm". That's what "everyone" does (everyone who is in a first world country and has a decent job). Is that somehow "smart debt"? Really? What's so smart about it? It is smart for whomever loaned that money out ... they get back free money paid consistently over the years. How is it smart, in 90% of the cases, for the borrowers? Our culture tends not to see this in the same way fish don't see water.

JoeAltmaier 12y ago
Really there's only car and house debt. The rest are small fry. And both of those can be problematic.
- jacquesm 12y ago
  Don't forget about credit cards and buying on credit. That's not necessarily 'small fry' and neither are student loans.
  - chrisBob 12y ago
    The average US household has $15k in credit card debt. A mortgage can be a sound investment, but paying over 10% APR on credit card debt is almost always a bad decision. http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/ http://www.nerdwallet.com/blog/credit-card-data/average-cred...
    - seanflyon 12y ago
      It's still terrifying, but according to your link $15k is the average indebted household credit card debt. The average credit card debt is about half that because only half of households have any credit card debt.
smackfu 12y ago
>It is smart for whomever loaned that money out ... they get back free money paid consistently over the years. Now explain why the same logic doesn't apply to a landlord being the smart one, and a renter being the dumb one.

andy_adams 12y ago

My experience with average folks tells me that "live debt free" is really good advice. I'd wager that most people don't take any consideration of the cost of interest, and thus it'd be super beneficial to just eliminate debt. It's sorta a UI problem. The simpler, the better for the average person. "Live debt free" is painfully simple and it'd be a great start for most people.